Polanyi’s Prescience: Covid-19, Market Utopianism, and the Reality of Society

by Margaret Somers and Fred Block *

One of Karl Polanyi’s fundamental concepts is ‘the reality of society’, a term he uses in The Great Transformation (TGT) (Polanyi 1944/2001) to contest the idealised model of the autonomous self-regulating market. Modern economies, he argues, are comprised as much by ‘society’ – our collective social interdependence and political institutions – as they are by ‘market forces’. Polanyi’s concept is both descriptive and normative, macro and micro: at the micro level, not only are we inextricably socially interconnected so that each person’s actions affect the fates of unknown numbers of others; we are also ethically responsible for the far-reaching consequences of our own behaviours. And at the macro, really existing markets, even in a so-called ‘free-market’ regime, are fundamentally constituted by political power and civil society institutions.
The reality of society is Polanyi’s challenge to the two foundational assumptions of today’s market fundamentalism: One, that economic processes are driven by an aggregate of autonomous individuals, each of whom seeks to maximise his or her utility, and for whom freedom depends upon absolute independence and sovereignty. Two, that national prosperity is best served when organised through self-regulating global markets, free of governmental inefficiencies and perverse social conditionalities. If Polanyi’s nemesis in the first instance is Margaret Thatcher’s famous assertion that ‘There is no such thing as society…’, the second is today’s lean ‘just in time’ global supply chain system that invests only in a low-paid ‘flexible’ precariat, designed to avoid costly inventories by producing all commodities on the global cheap in response to immediate market signals, and in defiance of what public health professionals define as the vital social infrastructural needs and public goods essential to the long-term well-being of populations.
For Polanyi, these two precepts – radical individualism and a theology of the ‘self-regulating’ market-centred society – add up to what he calls a ‘stark utopia’. It is utopian because, like all utopias, market fundamentalism represents an imaginary ideal based not on actual human experience, but on a thought experiment. In this case, the ideal is a world dominated by the propertied, free of political, social, and democratic interference, and modelled on the make-believe symmetry between the laws of nature and the laws of the market. For Polanyi this is a fictional delusion. While they are made to appear ‘natural’ human economies are social and political institutions. And while capitalism treats people with the callousness of Thatcherites, in practice it knowingly exploits the care and mutual support people, by necessity, provide to each other.
It is also utopian because commodifying our vital social substances requires massive social and political engineering – the continuous exercise of political and economic power, which conflicts with the market’s claim to being ‘natural’. Among Polanyi’s greatest insights is that the alleged absence of state power in a free-market regime is chicanery. For while government ‘meddling’ in the interest of the public good is said to have perverse consequences, the government is very much the market’s accomplice-in-chief in redistributing wealth and income upward, as, for example, when taxpayers fund vital medical research which, under the guise of public-private partnerships, accrues private gain exclusively to pharmaceutical companies.
And finally, it is utopian because a self-regulating market can never be realised without destroying the society it aims to marketise. The market fundamentalist ideal requires that almost all the social and natural world be commodified and subject to the price mechanism. Yet it is only by removing certain social substances from the market that social life remains viable. The more widespread the commodification, the more destined it is to produce a dystopia that threatens the survival of humanity.
In The Great Transformation Polanyi explains how that dystopian nightmare erupted in the late 1920s and 1930s, first in a world-wide economic collapse that caused untold suffering, and then into fascism, which threatened the future of humanity. Today, Covid-19 has precipitated another global crisis: It has exposed the profound damage that market utopianism has imposed on our collective well-being, producing afflictions that have already taken the U.S. far down the road to dystopia.

Covid-19 has confronted the U.S. with two overwhelming challenges. One, how to contain its exponential spread across the population, and second, how to cope with the overwhelming strain on the nation’s flimsy healthcare system. More than anywhere else, the U.S. has failed spectacularly with each of these, and Polanyi can help us understand why: each of these failures maps precisely onto the micro and macro fault lines of market utopianism.
For forty years we have been told that human freedom depends on absolute autonomy unimpeded by other people or government; that taking risks is a personal matter; and that assuming individual responsibility for whatever suffering we endure is what makes us morally worthy. Pandemics make a mockery of this worldview. Contagion, by its very nature, thrives on the reality of social interconnectedness. So, in the effort to curb the spread, public health experts from the outset mandated a series of critical practices – repeated hand washing, no touching, hugging, or hand-shaking, social distancing, staying at home.
At first it appeared that ‘we’re all in this together’ had overtaken the folly of ‘I’m on my own’. But few would have predicted what happened when public health experts declared that mask-wearing in public settings is essential to stop the spread of the virus. Much to everyone’s surprise, this seemingly innocuous face covering exposed just how deadly is the claim that freedom lies in being only responsible for oneself. For the paradox of masks, like the reality of society, is both sociological and ethical. We wear them not to protect ourselves but to protect others from the airborne particles we may unknowingly transmit, just as others wear them to protect us. Masks, it turns out, embody the truth of Polanyi’s ethics of solidarity. Wearing them indicates a recognition that our de facto interconnectedness inevitably risks infecting others, and mask wearing expresses our understanding that we are implicated in the fates of all those around us.
The consequence has been an extended mask war between conflicting freedoms – the freedom from getting infected by others versus the ‘threat to individual liberty’ many claim its wearing imposes. In Flint, Michigan, a store employee was shot dead for asking a customer to wear a mask. In Tulsa, Oklahoma, where Trump gave a huge indoor rally, the state’s governor refused to require attendees to wear masks because he ‘didn’t want to take sides in a political debate’. In Nebraska, the governor passed an executive order denying critical funding to any municipalities that require mask wearing. A Montgomery, Alabama City Councilman voted against mandatory mask-wearing by declaring ‘[a]t the end of the day, if an illness or a pandemic comes through we do not throw our constitutional rights out the window’. Most prominently of all, and with a boastful defiance of what he calls ‘political correctness’, President Trump triumphantly models his mask-free virility by holding indoor political rallies, corralling thousands of his followers into congested assemblages where they shout and spew particles on one another, all the while celebrating their freedom to refuse masks.
Covid-19 has clearly precipitated a dramatic confrontation between Polanyi’s opposing principles of the reality of society and the putative freedom of radical individualism. Contagion couldn’t hope for a better host than an illusory utopianism that defies the mortal urgency of ethical solidarity. In contrast to most other countries, infection rates in the U.S. continue to rise as the virus free rides on the back of the denial of the reality of society.

Even before the mask wars broke out, the most immediate and shocking impact of Covid-19 was its exposure of the catastrophic weaknesses in the US healthcare system. Everything was in short supply – personal protective equipment, N95 masks, ventilators, hospital beds, and the all-important testing kits. Instead of sanctuaries for the sick, hospitals became nothing short of dystopias as nurses and doctors were forced to reuse contaminated masks and to swaddle themselves in garbage bags. To date, hundreds of healthcare workers have died of the virus, many of whom could have been saved with the right protective gear. And there’s no way to know how many of the approximately 140,000 dead Americans might be alive today had there been adequate medical supplies and care.
How was this possible in the richest country in the world? This is where Polanyi’s macro critique of market utopianism becomes relevant. In a system of production and exchange organised exclusively by short-term market signalling, the needs of public health are systematically undermined. In just-in-time global supply chains, anything not being used is seen as a drag on the system; stockpiles have all disappeared, even those once used for indispensable medical supplies. Why pay for hospital beds that aren’t being used? Or for a back inventory of ventilators if they can be procured whenever the market demands? In a system organised by the assumption that companies should only buy when necessary, manufacturing medical commodities has chiefly migrated abroad to seek the lowest labour costs (and the meanest conditions), leaving the U.S. with virtually no domestic production of medical necessities.
The fragility of such a system is stunningly obvious, and in a matter of weeks from the pandemic’s arrival the global supply chains collapsed so dramatically that it was a crash heard around the world. In the face of overwhelming shortages, the Trump administration followed the market utopian playbook perfectly. The government refused to help provide essential supplies for the states and, pressured by private business, declined to deploy the 1950 Defence Production Act that would have required manufactures to produce necessary supplies. Instead, evoking the chillingly dystopian Hunger Games, Trump watched with perverse amusement as he forced the fifty states to compete frantically against each other to get the urgent medical equipment – by whatever means and at any cost. Denying there was a shortage, Trump even accused hospital workers of stealing masks and equipment. Combined with the absence of any meaningful social infrastructure for health care – counties with no hospitals in the wake of Medicaid cutbacks; ICU’s with insufficient beds; sick Americans without health insurance who simply forego medical care; healthcare workers receiving counterfeit masks and PPE – the American encounter with Covid-19 has proved the truth of Polanyi’s inevitable path from market utopianism to dystopia
The health care crisis exposes the tragic consequences of organising social life around the deadly logic of market utopianism, in which there is no place for public health. Public health treats disease not from the perspective of the healthcare industry but from the understanding that pathogens thrive in the deep webs of interconnectedness that characterise whole populations. Tasked with anticipating and preventing disease, public health work requires removing certain life and death necessities from the commodity regime and disentangling health care from the churn of the global market. This would entail government stockpiling of essential medical supplies as well as public investment in medical research, not only in funding but also in controlling the distribution and pricing of critical medicines and vaccines rather than handing over the work of public innovation to the logic of the marketplace – a logic that too often leads Big Pharma to abandon unprofitable vaccines and antibiotics. Above all, public health requires government planning, an old-fashioned word that was weaponised during the Cold War to evoke Soviet inefficiencies, the perversion of business incentives, and the alleged ‘road to serfdom’ posed by any deviation from Hayek’s free-market spontaneity.
As a democratic public good, public health planning conflicts fatally with market utopianism. Reflecting on the collapse of civilisation in the 1930s, Polanyi wrote: ‘[T]he victory of fascism was made practically unavoidable by the liberals’ [market utopians’] obstruction of any reform involving planning, regulation, or control’ (Polanyi 1944/2001, p. 265). This obstruction does not reflect a conflict between market versus government, for the market always entails state ‘planning, regulation, [and] control’, and Covid-19 demonstrates once again just how much the state is handmaiden to the market. The real question is to what end government control is being exercised and to what kind of power will it be subject-democratic or oligarchic? Is it toward commodifying, defunding and enfeebling the infrastructure of public health in the interest of corporate gain? Or toward strengthening the public good by enhancing solidarities across the whole population by decommodifying and supporting the human right to health care? 
For the dirty little secret of even the most marketised of societies is that none can survive without robust social underpinnings. The problem arises when, with the power of state behind it, the market devours those foundations by turning its elements into commodities. This happens when medically necessary supplies are subjected to the whims of the price mechanism, and when workers are forced by bosses and government mandate (as in the case of the meatpackers) to sacrifice their health and possibly their lives. Add to that the tragedy of African American, Latino, and Native American communities disproportionately dying of the virus–because they make up the predominant share of the low-paid ‘essential’ workforce and cannot work from home, and because the American health care system is riven with systemic racism. While markets are fine for widgets and iPads, ‘To allow the market mechanism to be sole director of the fate of human beings and their natural environment … would result in the demolition of society’ (Polanyi 1944/2001, p. 76).

Covid-19 has revealed how deeply entangled are the deadly trio of market utopianism, the denial of society, and the descent into dystopia. At a similarly dark moment in history, Polanyi praised the progressivism of Franklin Roosevelt’s New Deal to make the point that fascism in Europe was not the only or the necessary response to the contemporary crisis. Many hold out hope that today’s pandemic sets off a similar period of progressive democratic change. Yet the threat of a regressive and authoritarian regime designed to protect the interests of the wealthy remains very real. As Polanyi tried to teach us decades ago, rediscovering the reality of society can lead either to social reform or to fascism.

Reference:
— Polanyi, Karl. 1944/2001. The Great Transformation: The Political and Economic Origins of Our Time. Boston: Beacon Press.
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* Margaret Somers is Professor Emerita of Sociology and History University of Michigan, Ann Arbor; Fred Block is Research Professor of Sociology at the University of California, Davis. They are co-authors of The Power of Market Fundamentalism: Karl Polanyi’s Critique (2014). This article was originally published in Karl Polanyi: The Life and Works of an Epochal Thinker, edited by Brigitte Aulenbacher, Markus Marterbauer, Andreas Novy,  Kari Polanyi Levitt, and Armin Thurnher (2020)

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